Amazon – The Biggest Clothing Seller Online
It might soon overtake most of its brick-and-mortar rivals in fashion sales, as well.
For the past decade, fashion brands had viewed Amazon as the enemy. Brands swore off selling goods on Amazon, bemoaning its cluttered website and the risk of counterfeit goods. Many reluctantly started their own websites, but continued to rely on department stores for the bulk of their sales.
So Amazon started making its own private-label clothes. It bought Zappos in 2009, turbo-charging shoe sales. And it focused on selling the basics, such as t-shirts, leggings, and jeans — things people felt comfortable buying online and replenishing regularly.
As shoppers got more confident buying clothes on Amazon, that eroded the steady consumer spending on basic goods department stores once enjoyed.
Amazon increased the number of apparel and accessory products on its website by 87 percent last year from the year before, as its apparel sales hit $16.3-billion, according to trade publication Internet Retailer. That’s more than the combined online sales of its five largest online clothing competitors — Macy’s, Nordstrom, Kohl’s, Gap, and Victoria’s Secret parent L Brands.
Amazon’s apparel sales still pale in comparison to the $24-billion in U.S. clothing sales at Walmart, America’s largest apparel seller. But it’s not too far from Macy’s $21-billion in annual apparel sales and TJX Cos. $17-billion. It’s already surpassed the Gap, Kohl’s, Target, J.C. Penney, and Nordstrom in 2015 apparel sales.
Amazon – and its marketplace sellers – also figured out a clever way to ding department-store profit margins: Take a popular product – say, a purse or jacket – that’s only available in limited stock (maybe five or ten items) from Amazon sellers. List it a vastly discounted price. Retailers whose websites automatically match Amazon’s prices, or those that have price-match guarantees, end up losing out on profits.
And department stores are feeling the pain. Collective sales at the six largest U.S. department stores fell $660-million in the second quarter from a year before. A lot of those sales went to Amazon, whose clothing sales rose $1.1-billion in the quarter from a year earlier, estimates Morgan Stanley analyst Kimberly Greenberger.
A fifth of U.S. consumers now “frequently” buy clothes on Amazon, according to a Morgan Stanley survey in April. That rises to 35 per cent for Amazon Prime members.
But the biggest game-changer for Amazon is still unfolding. With sales waning at department stores – where many brands get the bulk of their revenue – Amazon has more leverage than ever before to accelerate its moves into apparel. Talk about fast fashion. -The Globe & Mail